Strategic Portfolio Review and Focus on Core Markets
Amcor completed a strategic review of its portfolio, focusing on defining its core markets in consumer packaging and identifying businesses less aligned with these priorities.
The company identified approximately $2.5 billion in sales from businesses that are less aligned with its core portfolio, which will be explored for value maximization through restructuring, partnerships, or sales.
Amcor is emphasizing growth in attractive nutrition and health markets, leveraging its leadership positions and technological capabilities.
The portfolio review aims to enhance focus, drive more consistent organic growth, and create shareholder value by divesting or restructuring non-core assets.
The process of portfolio optimization is ongoing, with no fixed timeline, but some smaller assets are expected to be addressed in fiscal 2026.
Adjusted EBITDA rose 5% to $125.8 million with a flat margin of 5.9%.
Free cash flow was $150 million, up $86 million year over year and $135 million sequentially from Q2.
Margins pressured in BNI and M&D due to strategic pricing and escalation timing decisions, with BNI margin at 7.1% and M&D margin at 8.9%.
Net income increased to $41.8 million or $0.67 per diluted share, compared to $4.7 million or $0.07 last year, influenced by absence of prior year adjustments.
Revenue grew 6.2% year over year to $2.2 billion, driven by 5% organic growth and 1.2% from acquisitions.
Segment revenues: BNI up 3% to over $1 billion, Aviation up 9% to $291.8 million, M&D up 8% to $408.9 million, Education up 3% to $235.1 million, Technical Solutions up 19% to $249.5 million.
Share repurchases totaled 1.5 million shares year to date for $71.3 million, with a recent board authorization increase of $150 million.
Total indebtedness stood at $1.6 billion with a debt to adjusted EBITDA ratio of 2.8x and liquidity of $691 million.
Strategic Review and Potential Portfolio Reshaping
The company has launched a strategic alternative review process, but does not plan to update the market unless there is substantive news.
Management believes the collective value of the assets is greater than the sum of individual parts, indicating a focus on potential value realization.
There is a possibility of divesting a non-strategic or non-core business, but the company has already integrated most assets and delivered significant synergies.
The ongoing review aims to maximize shareholder value without disrupting current operations or customer service commitments.
Management emphasizes that unwinding the current integration would be value destructive, reinforcing their focus on long-term strategic positioning.
Dafinchi